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CIRCULAR No

CIRCULAR No.03/TM-PC ON THE 10TH OF FEBRUARY, 1995 OF THE MINISTRY OF TRADE GUIDING THE IMPLEMENTATION OF THE STATUTE ON THE ESTABLISHMENT AND OPERATION OF REPRESENTATIVE OFFICES OF FOREIGN ECONOMIC ORGANIZATIONS IN VIETNAM

Pursuant to Decree No.82-CP on the 2nd of August 1994 of the Government promulgating the Statute on the Establishment and Operation of the Representative Offices of Foreign Economic Organizations in Vietnam, and Decree No.179-CP on the 2nd of November 1994 of the Government on the amendments and supplements to the above-mentioned Statute (hereunder referred to as Statute).

After exchanging views with a number of branches and localities concerned, and with the approval of the Prime Minister (official dispatch No.372/QHQT on the 23rd of January 1995), the Ministry of Trade gives the following concrete guidance on the implementation of a number of points in the Statute:

I. Objects eligible for consideration and granting of licenses to set up Representative Offices, and the agencies authorized to grant licenses for setting up Representative Offices:

1/ Object eligible for consideration and granting of licenses to set up Representative Offices:

Those foreign economic organizations mentioned in Article 1 of the Statute are organizations established to conduct business for profit (hereunder referred to as Companies). If they wish to set up Representative Offices in Vietnam to establish economic and trading relations with Vietnamese businesses and if they meet the conditions stipulated in Article 2 of the Statute and this Circular, they are eligible for consideration and granting of licenses to set up Representative Offices in Vietnam.

A company can:

-Either apply for the establishment of many independent Representative Offices under its direct management, all called Representative Office of the Company, in various provinces and cities of Vietnam; each Representative Office must have its own chief;

- Or apply for the establishment of only one Representative Office in a province or a city, and set up many branch offices of this Representative Office in other provinces and cities of Vietnam.

2/ The agencies authorized to grant licenses to set up Representative Offices:

- The Ministry of Trade is responsible for considering, granting, extending, supplementing, withdrawing or nullifying licenses for foreign companies (except credit organizations and banks) to set up Representative Offices in Vietnam;

- The State Bank is responsible for considering, granting, extending, supplementing, withdrawing or nullifying licenses for credit organizations and banks to set up Representative Offices in Vietnam.

II.- Eligibility for consideration and granting of licenses to set up Representative Offices:

1/ Companies to be considered and granted licenses to set up Representative Offices in Vietnam as stipulated in Article 2 of the Statute must fill these conditions:

- Companies established in accordance with the laws of their countries (the countries where the companies are established);

- They have operated in their own countries for no less than 5 years;

- They have investment and trading projects in which Vietnam is interested and are able to implement these projects to help promote economic and commercial development of Vietnam, notably:

+ Their investment projects have been licensed by the authorized agency of Vietnam;

+ They have signed economic, scientific and technical contracts and/or contracts on the transfer of new technologies in conformity with Vietnam's law;

+ They have signed contracts to import Vietnam's goods, particularly goods the exportation of which is encouraged by Vietnam;

Companies which apply for the establishment of Representative Offices in order to speed up the drawing up of investment projects or to carry out the procedure to apply for investment license in Vietnam, will also be considered for the establishment of Representative Offices within the time-limit necessary to complete the above-mentioned work, but not beyond 3 years from the date they are granted a license.

2/ Companies which enjoy relief in eligibility and are given priority in the consideration and granting of licenses as stipulated in Point 2, Article 2, of the Statute, are:

+ Companies newly established which have operated for less than 5 years, but which have an investment project licensed with a capital equal to 10 million USD or more; or which have a contract to import goods produced or processed in Vietnam and the exportation of which is encouraged by Vietnam, such as arts and crafts, aquatic products, farm products...;

+ Business groups or companies which have been established and have operated in a foreign country for no less than 5 years, but which now establish a new company to have economic and commercial cooperation with Vietnam, are also eligible for consideration and granting of licenses to set up their Representative Offices in Vietnam.

III.- Procedure for considering and granting licenses to set up Representative Offices :

1/ Companies which wish to set up a Representative Office or a branch office of their Representative Office in a province or city of Vietnam, must send to the Ministry of Trade a dossier including :

- An application for setting up a Representative Office, one copy in Vietnamese and one copy in English;

- A certificate on the establishment of the Company (the original copy in English or a photocopy of it notarized by the country where the Company was established, and one copy of the Vietnamese version);

- A brief resume of the Company (one copy in English and one copy in Vietnamese);

- A certificate of the Company's state of finance in the latest year granted by the audit organization of the country where the Company was established (original copy in English or a photocopy of it notarized by the country where the Company was established, and one copy of the Vietnamese version);

- Investment license or investment project not yet licensed; the commercial contract or the contract on economic, scientific and technical cooperation to be verified (photocopy).

The company must send this dossier directly to the Ministry of Trade (in Hanoi), and the Office of the Ministry of Trade shall sign a receipt to the company's dossier. If the company is unable to send the dossier directly to the Ministry of Trade, it can empower (in writing) a business or service organization established in accordance with Vietnam's law to forward the dossier to the Ministry of Trade on its behalf.

2/ After receiving the dossier from the Company:

- The Ministry of Trade must send a paper exchanging opinions with the State managing ministry concerned in the specialized branch, and with the People's Committee of the province or city where the Representative Office is to be established.

- Within 20 (twenty) working days after this paper is sent, if the Ministry of Trade does not yet receive a reply from the offices concerned, it shall consider the dossier and decide to grant or not to grant a license for the Company, to set up its Representative Office in order to meet the deadline set at Article 6 of the Statute.

3/ The original copy of the license for setting up a Representative Office shall be granted to the Company concerned, and a photocopy of it shall be sent to the People's Committee of the province or city where the Representative Office is located.

IV.- On the obligations and rights of Representative Offices :

1/ Upon receiving the license (granted for the first time, granted with supplements to the contents of its activity, or extended), the Company concerned must pay a fee as stipulated by the Ministry of Finance of Vietnam. The Vietnamese State shall collect no other fee than the official fee.

2/ Representative Offices shall not conduct business (production, buying and selling of goods and services) for profit in Vietnam; shall not sublet their office and housing space, and shall not perform the function of representative of other companies in Vietnam.

3/ The Chief of a Representative Office and its staff have no right to sign any trading contract with Vietnamese businesses, unless they have a legal mandate from the Company's Director.

4/ The Representative Office can lease office space (only one location for office space in each province or city), housing space and facilities for its operation and living as stipulated by Vietnam's law.

5/ The Representative Office must register, with the People's Committee of the province or city where it is located, the number of foreigners entering Vietnam to work at its office (including foreigners and Vietnamese residing in foreign countries) according to the size of the staff stipulated in the license; and the number of staff members recruited in Vietnam to work at its office (including Vietnamese citizens and foreigners residing in Vietnam) in accordance with Vietnam's Labor Law, and is obliged to create favorable conditions for its staff members to pay fully their income tax as stipulated by law.

6/ The Representative Office must buy the compulsory insurances as stipulated in Article 14 of the Statute and according to the guidance of the Ministry of Finance of Vietnam.

7/ The Representative Office can open a bank account for expenditure (in foreign currencies or in Vietnamese Dong originating from foreign currencies) at a bank which is established and operates in accordance with Vietnam's law, for administrative expenditure; it shall not use this account for business purpose, for profit gaining services, or as a transaction account (to deposit Vietnamese Dong into its account and then change it into a foreign currency for transfer abroad or to pay for goods in Vietnam).

8/ The Representative Office can import into Vietnam the necessary things for its work and living, but must pay tax according to the Law on Export-Import Tariff currently in force in Vietnam, and must go through the import procedure as stipulated by the General Customs Department of Vietnam.

9/ A Representative Office can have its own seal indicating the Company it represents and the province or city where it is located... according to the format and form stipulated by the Ministry of the Interior of Vietnam, and can use the seal only in its administrative relations in Vietnam.

V/ About the registration of operation by Representative Offices :

1/ Within 90 days at the latest (regarding the license granted for the first time) or 15 days (for an extended or supplemented license) from the date when the license is granted, the company concerned must send to the People's Committee of the province or city where its Representative Office is located a dossier to register its operation, including:

- The register of operation;

- The contract and other documents on the lease of housing space in Vietnam;

- The contract and other documents concerning the hire (recruitment) of labor in Vietnam;

- A document appointing the Chief of the Representative Office by the Company's Director;

- The resumes of the Chief of the Representative Office and of the persons recruited abroad and the persons recruited in Vietnam for work at the Representative Office.

2/ The People's Committee of the province or city where the Representative Office is located shall have to ratify the register of operation of the Company within 15 days after receiving its full dossier.

3/ After ratifying the register of operation of a Representative Office, the People's Committee of the province or city concerned must send a photocopy of the register to the Ministry of Trade for supervision and inspection.

VI. On the change of name, the extension and supplementation of licenses, and the termination of operation of Representative Offices :

1/ Changing the name of a Representative Office : A Representative Office can change its name only when the Company has changed its name in accordance with the law of the country where it is established.

In case of merger, dissolution or pooling of capital to establish a juridical person with a new name and new function and task, the new Company, which wants to set up a Representative Office in Vietnam, must go through the procedure from the beginning, in accordance with the law in force.

2/ Extending licenses to set up Representative Offices : When a license is going to expire, if the Company wants to have it extended, it must send to the Ministry of Trade 30 days before the expiry date a dossier including :

- An application to extend the Company's license;

- A brief report on the activities of the Representative Office during the time the license is in effect;

- A paper recording the opinion of the People's Committee of the province or city where the Representative Office is located, about the extension.

3/ Supplementing the licenses of Representative Offices :

a/ Amending and supplementing the contents of activity : A Representative Office can request amendment and supplementation to the contents of its activity only if these amendments and supplementations conform to the function and task of the Company, or if there are changes in the function and task of the Company in accordance with the law of the country where it is established and in conformity with Vietnam's law;

b/ Broadening the staff of a Representative Office : a Representative Office can increase the number of persons recruited abroad to its staff working in Vietnam only after it has received a written approval from the Ministry of Trade. On the number of persons recruited in Vietnam, the Representative Office concerned has only to register it with the People's Committee of the province or city, and no limit is imposed on this number.

4/ Terminating the operation of Representative Offices :

a/ In case a Representative Office ceases its operation as stipulated in Points 2 and 3, Article 10 of the Statute, the Ministry of Trade shall issue a notice to the Company and the People's Committee of the province or city where it is located 30 days before the cessation of its operation.

In case a Representative Office ceases its operation as stipulated in Point 2, Article 10 of the Statute, the Company must send its request to the Ministry of Trade 60 days before the scheduled date of termination and can only cease its operation after receiving a written approval from the Ministry of Trade.

b/ A Representative Office may have its license revoked if it violates Vietnam's law and is fined from 20,000 USD upwards (not counting recidivism).

c/ In any case, when a Representative Office ceases its operation, the People's Committee of the province or city where it is located is the agency authorized to supervise, inspect and urge the Representative Office concerned in discharging its obligation as stipulated in Article 11 of the Statute.

VII. On the responsibility of management, supervision and periodical reporting :

1/ The responsibility of management and supervision of managing offices of the Vietnamese State :

a/ The Ministry of Trade shall have to :

- Exercise unified State administrative management of all activities of Representative Offices in Vietnam;

- Act as a center of coordination for the public offices and localities concerned to organize supervision of all activities of Representative Offices when necessary, and/or at the proposal of the ministries and branches, and/or the People's Committees of provinces or cities concerned.

b/ The ministries and branches concerned shall have to :

- Exercise State management in the specialized branch in accordance with their function, task and powers, and promptly exchange opinions with the Ministry of Trade and/or the People's Committee of the province or city where the Representative Office concerned is located, on questions arising from the activities of Representative Offices in order to coordinate their direction;

Join the Ministry of Trade and/or the People's Committee of the province or city where the Representative Office is located, in supervising the activities of the Representative Office, and advise the Ministry of Trade and/or the People's Committee of the province or city concerned, to issue decision to handle violations with their juridiction.

c/ The People's Committee of the province or city where the Representative Office is located shall have to :

- Exercise administrative management over the Representative Offices in its locality, including the management of related administrative procedures as leasing housing space, recruiting (hiring) labor, registering their operations as stipulated, and all activities of the Representative Offices in the locality;

- Periodically (every year), or whenver necessary, cooperate with the public offices concerned in organizing inspection of all activities of the Representative Offices in the locality, by a written decision of the President of the People's Committee of the province or city.

When the need arises, propose to the Ministry of Trade to cooperate with the public offices concerned to organise inspection of the activities of the Representative Offices in the locality by a written decision of the Ministry of Trade.

2/ On periodical reporting :

- Once every 6 months, a Representative Office must send a report (in Vietnamese and in English if necessary) to the Ministry of Trade and the People's Committee of the province or city where it is located, on its activities (the report on the first 6 months of the year must be sent before the 15th of July, and the annual report before the 20th of January of the following year).

- In cases of necessity, the Ministry of Trade and the People's Committee of the province or city where the Representative office is located, can request the Representative Office to file in an urgent report apart from the periodical reports as mentioned above.

VIII. - Effective time:

This Circular replaces Circular No.04 TN/PC issued on the 6th of May 1991 by the Ministry of Trade, and takes effect from the date of its signing.

In the process of implementing this Circular, if any difficulty or problem arises, the Ministries, the Ministerial-level Agencies, the Agencies attached to the Government, and the People's Committees of provinces or cities should promptly report it to the Ministry of Trade for solution in accordance with its powers, or for submission to the Prime Minister for instruction.

For the Minister of Trade

Vice-Minister

MAI VAN DAU